View full sizeThomas Boyd/The OregonianLike thousands of her fellow lawyers, Bridget Budbill is struggling to get her legal career launched amid a major shakeout in the industry. The University of Oregon Law School grad is deeply in debt and living a spartan existence, which includes motoring around in a 33-year-old Mercedes that was once her family's car.

Bridget Budbill is working a temporary job, living in a cramped studio apartment and nursing a '79 diesel Mercedes with timing chain issues. In November, her job ends and the first payment comes due on her $150,000 law school debt.

Budbill is one of a "lost generation" of rookie lawyers who incurred stratospheric debt only to graduate into the worst market for first-year attorneys in decades. Long seen as a road to upper-middle-class comfort or even country club wealth, law school has instead left her stalled.

Nationally, fewer than half 2011 law school graduates found work as lawyers, the least in recent memory, perhaps ever. Those lucky enough to find lawyer jobs were greeted with salaries 17 percent less than two years ago.

When the recession KO'ed the economy in 2008, it ushered in a frightening new era of financial and professional anxiety. The law business has proven just as vulnerable as countless others to the combined forces of the economic slowdown, pervasive technological change and globalization. A couple years into a frustratingly slow recovery, the new normal has slapped a shell-shocked legal world.

Law firms are downsizing, a handful are going bankrupt. Nearly 9 percent of law firm associates lost their job in 2009. Clients are demanding a new cost-sensitivity, an environment that leaves precious little room for new law school grads.

The struggling young lawyers personify one of the great public policy dilemmas of our time. A highly educated citizenry has never been more vital to America's global competitiveness. But is higher education worth the ever-increasing cost? Is the trillion-dollar torrent of student loans bankrolling the system sustainable? Is a system that leaves some of the best and brightest of the young generation mired in debt doing anyone any favors?

The issue raises hard questions for the very big business of higher education. What is the morality of law schools collecting $4 billion-plus in annual tuition and fees to produce another 43,000 lawyers when supply far exceeds demand?

Dismal job prospects drive law school graduate to Rock and Roll Camp for GirlsBeth Wooten is the executive director of Portland's Rock 'N' Rock Camp for Girls. The former punk rock guitarist and self-designated idealist graduated from University of Oregon Law School in May 2011, but realized there was little to no chance she could find a job as a lawyer. Now she's saddled with $150,000 debt and makes less money than she did before entering law school.

Today's law school grads are not the first to see their hard-earned graduate degrees yield disappointing results. But they are among the first to rack up home-mortgage-sized debt in the process.

"This is a generational catastrophe," said Paul Campos, a University of Colorado law professor and scathing critic of the status quo. "It's an absolute disaster out there, for the legal profession in general, but especially for people who are entering it right now."

Some law students say they were hoodwinked. Grads have filed 12 class-action lawsuits against their schools claiming they were misled about job and salary prospects.

Budbill says no one tricked her into taking on the debt. She also doesn't remember any law school official ever warning her off the loans.

"I don't regret law school," Budbill said. "I don't know if I'd do it twice. I never thought it would be easy. I just never thought it would be so difficult to get started. This debt is like a black hole. It will follow me the rest of my life. "

PUTTING ON THE BRAKES

In 2009, when Budbill was still giddy at being accepted into law school, Wally Van Valkenburg and his partners at the Stoel Rives law firm in Portland faced a grim reality. Customers clamored for the city's largest, most prestigious and most expensive law firm to cut its bills.

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The economy was in disarray and the firm's annual revenue -- then $190 million -- was flattening. So in one of the few times in Stoel Rives' illustrious history, it laid off a handful of associates and support staff.

"It's a tough business out there right now," Van Valkenburg said. Customers recognize there are thousands of individual lawyers in the U.S. eager for contract work. There are entire firms in India and the Philippines that will work for a pittance. Technology companies offer products that automate parts of the practice of law.

"We have a client that is pushing us to go offshore," he said. "Their attitude is, you need to figure this out or we'll go find people who can."

Michael Owens landed one of the coveted summer internships at Stoel Rives that same summer. The Montana native, a highly ranked student at Willamette University Law School in Salem, thought he'd hit the motherlode. Historically, a competent second-year intern could count on a full-time job at Stoel waiting upon graduation.

Owens loved his time at the firm, which made the news in October all the harder. Stoel would hire none of its summer crew. "Everyone said they were happy with my performance," Owens said. "It was the economy."

Owens was forced into a once-unthinkable path -- he and three other rookie lawyers started their own firm in Portland.

The current tight times contrast to much of the 1990s and the first half of last decade. Law schools couldn't produce graduates fast enough, particularly as the dot.com boom turbo-charged the economy.

"It wasn't particularly price-sensitive work because there was so much money flowing," Van Valkenburg said.

It was a sweet time for young lawyers. Stoel Rives paid first-years $100,000 to $110,000 a year. "Greedy Associates" websites and list-serves popped up around the country where young attorneys plotted how to get more.

By mid-decade, well before the recession, things began to change. Clients questioned ever-escalating legal costs. The information revolution gave easy access to information and empowered clients with alternatives to traditional legal services. Then came the mortgage crisis, the housing bust and the near collapse of the U.S. financial markets.

"People just hunkered down," said Steve English, of the Perkins Coie firm in Portland. "They were terrified to spend money and they realized they didn't have to. They cut their legal spending and it's not coming back."

Lewis & Clark, UO and Willamette produce more than 500 law graduates per year. The percentage of their students' finding lawyer jobs mirrors the national plunge. But the schools have enjoyed sustained revenue gains and hefty management salaries that would make the private sector envious.

Lewis & Clark Law School's revenue has soared from $19 million to $30.1 million the past decade. The UO Law School revenue jumped from $10.1 million to $17.4 million.

Willamette refused to divulge its law school revenues. But with 407 students in 2011 paying $32,540 in annual tuition and fees, the number is north of $13 million, a 40 percent jump from 2002.

Of course, the schools' expenses have also increased. In particular, state support of the University of Oregon has fallen to a pittance, forcing UO to find other revenue. Those expenses include some handsome salaries.

Symeon Symeonides, the now-retired dean of Willamette Law School, received $342,879 in total compensation in 2010, according to its tax returns, making him the highest-paid law school administrator in the state. Lewis and Clark's Robert Klonoff received $273,632 in 2010. Three Lewis & Clark professors at the school also boasted compensation north of $200,000.

The travails of their students has led to some soul-searching at the law schools. Klonoff said flatly there are too many law schools. "There are 200 law schools, there should be 125," he said. Klonoff intends to shrink Lewis & Clark's enrollment to less than 200 per class. In prior years its entering class ranged from 226 to 247.

The schools are scrambling to adjust their curriculums, emphasizing practical over theoretical. They've stepped up efforts to help grads find jobs, clerkships, internships, anything to get real-world experience and establish a network of industry contracts.

Students, of course, pick up the tab. Three years of law school currently costs from more than $75,000 for in-state students at UO, to $97,500 at Willamette to $114,450 at Lewis & Clark. Add another $30,000 to $45,000 for three years of living expenses.

Most young law students don't have that kind of cash laying around. So they borrow.

UO and Willamette 2011 graduates reported average total debt of more than $90,000 in 2011 while Lewis & Clark students' average debt in 2010, the most recent year available, topped $112,000.

IN DEEP

It's become fashionable to berate students for incurring that kind of debt.

Mark Kantrowitz, creator of the respected finaid.org college finance website, said students badly need a remedial course in personal finance. They don't understand the life-altering ball and chain that a six-figure loan at 7-plus percent interest actually poses. "They just sign the promissory notes," he said.

The law school grads interviewed for this story to a person said they didn't think enough about the impact of the debt when they accepted the loans. They were thrilled to survive the rigorous admittance process. Loans were presented to them as a normal rite of passage.

None of the grads remembers anyone from their respective schools counseling them to be wary.

"The total cost was never clear," Budbill said. "It may be totally my fault. But I figured I had three years. Everyone does it. My dad went to grad school. He borrowed."

Budbill is resourceful. After getting nowhere at law firms, she volunteered for Mary Nolan's Portland City Council campaign and leveraged it into a paying job fundraising for the Oregon Democratic Caucus. She's been able to defer payment on her debt for a year. The deferment ends this fall as does her job.

"I have no idea what happens in November," she said.

Other students said employment and average starting salary data provided by their schools reassured them. Courtney Munson graduated with honors from UO Law School. Unable to land a position as an attorney and facing $64,000 in debt, she left Eugene for her home state of Alaska.

"It's really depressing," said Munson, who has since gone to work for an Anchorage nonprofit active in renewable energy issues. "Part of me feels like I should have done more research. On the other hand, they don't make it easy to do the research. They sort of cook the books. They've got these average salary numbers. But the numbers are skewed by a couple of people earning six-figure incomes. And then you've got a bunch of other people making $40,000."

Whether law schools are providing accurate information or self-serving propaganda has set off a nasty legal battle. Former students have filed at least 12 lawsuits against their schools claiming they were defrauded. Kyle McEntee, a Vanderbilt University Law School grad, co-founded the Law School Transparency Project in hopes of forcing the law school establishment to get real with prospective students.

Until recently, the only job placement data made available by the schools was a simply yes/no employment question asked nine months after graduation. The survey made no distinction between a young corporate lawyer pulling in six figures and a guy flipping burgers. The American Bar Association, which accredits the nation's law schools, quickly yielded to popular pressure and began demanding the school provide significantly more details.

"Whether these graduates are going to win in these lawsuits, whether they're going to get any damages, I don't know," McEntee, said. "The underlying claims that they've been misled, there's no question in my mind that is true."

The federal government took control of the college loan industry in 2010. It was a natural, if controversial, evolution from the prior arrangement, when banks made the loans and the government guaranteed repayment. "It made sense to cut out the middle man," said Christian deRitis, an analyst at Moody's.

College debt is one of the rare forms of debt that cannot be discharged in bankruptcy court. The government can garnish 15 percent of a defaulted borrower's wages, tax refunds and Social Security payments.

The government has also instituted programs that allow students to consolidate loans, to defer payment and even forgive the debt.

Tom Borton, a 2009 UO law school grad, is taking advantage of all three. He works for Metropolitan Public Defender Services, a nonprofit in Portland providing legal services to the poor. He owes $136,000. But because he makes just $46,000 a year, he qualified for an income-based repayment program that cut payments to $476 a month.

Borton figures his salary will max out at the public defender's office at about $69,000, a decidedly modest sum for an experienced attorney. Fortunately, he enjoys his job, because he can't afford to leave. He needs to stay in public service 10 years to get some or all his debt forgiven.

Borton's fiancée is also a new lawyer and burdened with debt. Right now, they're making it work. "I'm one of the lucky ones who landed on his feet," he said. "But I don't have a family. A lot of my financial hardships are ahead of me still. The debt constrains what people can do. It constrains people from being creative. How do you get out on your own? I can't."

There are plenty of grads who wished they faced Borton's problems. At least he's practicing law.

Joe is a 2011 Willamette grad. (He asks that his full name not be used.) He sent 34 applications in the first month after graduation. Only 10 bothered with a rejection letter.

Joe has the deeply tanned face of the avid golfer, which he is. But he's on the golf course for a different reason these days. To get by, he works an early landscaping shift. The crew of largely Latino workers allows him to fine-tune his Spanish, he said.

His $131,000 debt has already grown to $137,000 with interest. Over the life of the loan, he figures he'll pay between $400,000 and $500,000.

Joe vows to carry on. He continues to network. But given his lousy luck getting interviews, he's considering opening his own practice.

"There are definitely times when it hits you harder than others," he said. "I can't even get in the room."